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Tax Debt Resolution in Racine and Kenosha, Wisconsin


Tax Debt and How The Michelson Law Office Can Help You

The Michelson Law Office is primarily a bankruptcy law firm and we love helping people who have outstanding tax debt. We believe bankruptcy in many cases can be the very best way to deal with one’s tax obligations, whether it is the IRS or the State Department of Revenue.
However, we realize that bankruptcy is not the only option and in some cases maybe not the best. Our philosophy is to look at bankruptcy and see if that is your best option in dealing with your tax debt. If bankruptcy is not the best way to handle your outstanding tax obligations, then we will review with you what the IRS and your state’s Department of Revenue offer in terms of programs to help people with their outstanding tax debt and plan a course of action to help you deal with what you owe.
Calculator and tax form

An Important Tip About Taxes and Tax Returns

Make sure you always file your taxes, especially if you owe. Don’t worry about what you owe or how you are going to pay for it. That is why we are here to help you. Just file the tax returns. If you fail to file your tax returns, the relief we or anyone else can offer is you will be minimal and painful at best. So please file your tax return if you owe.

How Bankruptcy Law Can Help Resolve Your Tax Debt

In both Chapter 7 and Chapter 13, it is possible to simply eliminate or discharge your bankruptcy if you have filed your returns in a timely fashion and the tax debt is more than three years old there is a good chance that you will be able to eliminate what you owe in a Ch. 7 bankruptcy case. Chapter 7 takes about 5 months total. If your tax obligations meet all the required standards they will simply be discharged in your bankruptcy case.
This is usually a rare occurrence to be honest but it does happen. In most cases our clients have some tax debt obligations that they won’t be able to fully discharge in a chapter 7. The question then is should we do a Ch.13 bankruptcy case and have our client pay what they are required to and simply discharge everything else and have a clean slate in 3-5 years when the case is completed.
Ch.13 is particularly helpful when you have tax liens. It is possible that we could cram down what you owe to the value of your personal property. See an example below. This is an actual case we are currently working on.
Example: Tom owes $150,000 dollars in tax debt secured by his personal property due to a tax lien file by the IRS. He files bankruptcy and his bankruptcy petition lists $10,000 in total personal property assets. Tom will pay a total of $10,000 dollars to the IRS and the remaining tax debt will be declared unsecured like a credit card and Tom will pay nothing of the remaining tax balance. This is an entirely achievable and real goal. Not everyone’s case will be like this but it is possible that we could achieve a similar result in your bankruptcy case.
The most important thing about Ch. 13 is that when you sit down with us to sign your bankruptcy petition you are going to know exactly how much you owe and how much you are going to have to pay back.
We do the research, we call the IRS and the Department of Revenue and we get the account transcripts for the years you owe. We will know the balances and the status of your tax debt. So when you go over your bankruptcy case you will know exactly what to expect in your case. Another reason to file a Ch. 13 Bankruptcy case is that as long as you cooperate with us, we will be able to get that case filed fairly quickly. Really quickly, if it is an emergency.
Ch. 13 however serves another important purpose in respects to tax debt. Ch. 13 is know as a reorganizational bankruptcy. You are paying off certain debts and simply eliminating other debt through the discharge process. A successful Ch. 13 will give you a fresh start and you will be totally organized financially once you emerge from your case. You have to deal with your Tax Debt. You cannot ignore it. Ch. 13 provides you a 5-year window of opportunity to deal with your tax obligations and in many cases the debtor does not repay all their tax debts. For the reason listed above, Ch. 13 is one of your best options in dealing with your tax debt.

IRS and Department of Revenue Options in Dealing With Your Tax Debt

In some cases Bankruptcy isn’t a good option in respects to dealing with your tax debt. Depending on the amount you owe or the type of tax debt you owe, you may wish to seek other options to deal with your tax debt. The IRS and the Department of Revenue offer several options in dealing with your outstanding obligations.

Offer in Compromise

An offer in Compromise (OIC) is exactly what it sounds like. It is an agreement between the tax payer and the government in which a tax liability is settled in exchange for payment of less then the full amount owed. IRS & State Dept of Revenue’s each offer Offers in Compromise. The IRS has tough standards and the State Department of Revenue’s are just as difficult.
The IRS offers different types of Offers in Compromise for individual Personal Taxes.
1) Doubt as to Liability-Does the Taxpayer actually owe the tax in question.
2) Doubt as to Collectibility-Does the Taxpayer have the ability to pay it back
3) Promote effective tax administration-Rarely Used but a means to collect what is practical and just under the Internal Revenue Code.
You can file an offer in Compromise for Business and Trust Fund Taxes. For purposes of this information, we are concentrating on individual income taxes owed. Come see us and let us help you with your Business or Trust Fund Tax Offer in Compromise.

Basic Offer in Compromise Facts Taxpayers Should Know

This is not an exhaustive list but the information below are the rules or facts that most tax payers who wish to participate in this program should know when deciding whether or not they think the Offer in Compromise is a realistic possibility for them Don’t do this alone. We look forward to the opportunity to help you make your offer in compromise a success!
A). It currently takes 6-8 months before you will get an answer from the IRS about whether or not they will accept your offer. The State Department of Revenue may be shorter or longer depending on the state you are in.
B). While you’re waiting for an answer to your “Offer” the expectations is that you are making payments on your outstanding tax liabilities and that collection efforts may not stop.
C). There is a $186/ filing fee for each offer filed.
D). You can pay in a lump sum amount or pay over two years.
E). If you choose the lump sum option you must send in 20% of what you are offering with your formal offer. You are expected to pay the remaining balance off within the next 5 months.
F). If you choose the periodic payment plan it must be paid off in 24 months.
G). If you have the ability to pay the tax in full through an installment agreement or Lump Sum Payment your “Offer” package will be denied.
H). The statute of limitations on collections and audit capabilities of the IRS are extended while you are in the Offer in Compromise and awaiting a response on your offer.
I). If your offer is accepted, for the next 5 years the tax payer must file timely returns and pay any tax debt in full or the Offer will be rescinded and the amount forgiven will now be collectible.
J). If your offer is rejected, the IRS will ask you to withdraw it and this ends your appeals rights and it improves the IRS statistics.
K). IRS says no often. The best chance to beat those offs are to become as familiar with the process as possible and get help from a professional who knows how to get this done. For all the rules and instructions see www.irs.gov and also check out the IRS’s OIC Pre-Qualifier Tool also at that site. It will give you a better idea of what your chances are at success at this program.

Installment Agreements

Installment agreements, a fairly simple concept. You will pay the entire amount that you owe back to either the IRS or the State Department of Revenue depending on who you owe the taxes to.
We can help you set up an installment plan with the IRS or the State Department of Revenue. Though I will tell you the plans are fairly simple to set up themselves and in most cases you can call the IRS or your State Department of Revenue and they will be more than willing to help you with this. It will save you attorney’s fees. If talking to these agencies makes you nervous then let us help. Ignoring what you owe is not a viable option.

Achieving Non-Collectible Status

If you owe tax debt but really have no way of possibly paying it back, then being declared non-collectible for a period time may be an option for you. Call us to schedule an appointment. We will help you fill out the forms and file the paperwork. Please be advised this is not an easy status to achieve. The IRS and your respective Department of Revenue will heavily scrutinize the information provided to ensure that they only declare you “Non-Collectible” if the evidence bears this out.

Being Audited by the IRS

Are you personally or your business being audited by the Internal Revenue Service? Well you don’t want them at your business or your home looking at your records. You want them at your attorney’s office scrutinizing those records. If you get a notice of audit and have been advised by the Internal Revenue Service that they will be performing a field audit. Contact us. Let us help you deal with the IRS.

Final Words of Advice

Take your outstanding Tax Obligations seriously!!! The IRS and your State Department of Revenue are taking them very seriously. File your Taxes! Especially if you owe.
If you don’t file your taxes when you are supposed to; then your options become limited and in some cases quite painful in terms of dealing with your tax debt. We hope the information we have provided to you is useful. We look forward to helping you deal with this stressful situation.

Hire Our Attorneys

Don’t suffer from unpaid taxes. Contact The Michelson Law Office – Bankruptcy Only today to schedule your free consultation. We will help you find the relief you are seeking.